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Crude Oil($USO)continues its steep slide from its October peak.  One month ago $USO reached new 2018 highs as it extended its rally since the 2017 close to 35%.  Since then crude has struggled mightily.  This week has been particularly painful.  Yesterday the $USO closed well below its 200 day moving average, its first close below this key long term indicator in over a year.  Today the index is working on its 5th straight loss as it stretches the pullback from the highs to 17%. 

The $USO is testing a major support zone as the week comes to an end.  The area between $13.00 and $13.50 marks a series of important highs and lows.  In the 1st quarter of this year the $13.30 area provided heavy resistance.  Once this level was cleared in early April it has served as a floor.  In June it began to give way but ultimately provided the footing for a powerful breakout on June 22nd.  After a dip in early August another monthly low was put in place near this key zone.  

A clear break below $13.00 would be very damaging.  Until then the $USO, while entering oversold territory, should be considered a fairly low risk buy. 

At time of publication we do not have a position in $USO.